The personal blog of Peter Lee a.k.a. "China Hand"... Life is a comedy to those who think, a tragedy to those who feel, and an open book to those who read. You are welcome to contact China Matters at the address chinamatters --a-- prlee.org or follow me on twitter @chinahand.

Thursday, November 18, 2010

I’ve written quite a bit about Japan’s Foreign Minister, Seiji Maehara, in the context of his “China-hawk” policies.

He’s a firm believer in the U.S. security relationship and, I think, sees himself as the Asian Tony Blair:
Youthful, intelligent, agile, sophisticated in the modern diplomatic discourse, but also possessing the clarity and cojones to push/follow the United States into bold, new, and effective paradigms for the projection of military and soft power into East Asia.

Or, from a more cynical perspective (which, I confess is the habitual posture of this blog), one might view Maehara as an ambitious politician who has hitched his wagon to hyping the China threat, upgrading the security relationship with the United States, and revising the peace constitution to permit overseas military operations in order to position himself as a pre-eminent neo-liberal hawk.

Be that as it may.

I have an article up at Asia Times, Re-enter the Dragon, concerning the DPJ government’s awkward attempts to deal with Maehara’s efforts to amp up the contradictions between China and Japan.

The article contains a perspective on DPJ politics and China policy that I don’t think you’ll find anywhere else, at least in the English-language press, so I’m going to excerpt it here:

China's unwillingness to cut Maehara any slack extends beyond questions of global strategy and national relationships to matters of internal politics in the ruling Democratic Party of Japan (DPJ).

China's designated friend in the DPJ is the "shadow shogun", Ichiro Ozawa. In contrast to Maehara, Ozawa has advocated closer relations with China and a distancing from the US. The DPJ has chosen to cast aside Ozawa, the most effective interlocutor with China, for reasons of policy and politics.

After the fall of prime minister Yukio Hatoyama in September, Ozawa lost the contest for DPJ party head (and prime minister) to Kan; however, his disciplined faction in parliament controls almost half of the DPJ votes. Kan and Maehara - who has conducted a strategic vendetta against Ozawa for years - have been united in their desire to reduce Ozawa's influence.

Ozawa has been successfully tarred as a throwback representative of Tanaka-style money politics. Maehara and his ally, Katsuya Okada, have been badgering Ozawa to appear before the Diet (parliament) to answer embarrassing questions concerning some piece of fundraising skulduggery. On November 9, Yomiuri reported that 55% of respondents to its poll want Ozawa to resign his Diet seat since a panel has recommended his indictment.

Unsurprisingly, the DPJ has consistently expressed frustration that it lacks good channels to Beijing. Cabinet secretary Yoshito Sengoku has tried to establish himself as the go-to guy for China, with little apparent success.

China has little motive to enable the political careers of Kan and Maehara as they proceed with the political destruction of China's most important ally within the DPJ. So China may take some satisfaction from the finding that approval ratings for the Kan government have sunk to 35%, driven in large part by widespread dissatisfaction with the government's handling of the Diaoyutai/Senkaku fracas.

Kan and Maehara's campaign against Ozawa may have had important strategic consequences as well.

It is not unreasonable to assume that Kan's political strategy involved turning to the US to help Japan manage China in a more adversarial way, since it was actively foreclosing the conciliatory route represented by Ozawa.

Indeed, it is tempting to interpret Maehara's elevation to foreign minister, and his enthusiastic exploitation of points of antagonism with China, as the Kan government's way of tightening relations with the United States in order to compensate for its institutional difficulties in managing the China relationship alone.

It’s important to remember that Maehara served as head of the DPJ while it was in the opposition.

He crashed and burned spectacularly when he continued hyping an e-mail alleging dirty money activities by an LDP bigwig even after he knew it was bogus, and had to resign.

But he wants to make a comeback, and he probably wouldn’t mind pushing aside Naoto Kan, who represents the more old-fashioned leftwing/labor roots of the DPJ.

From Kan’s point of view, putting Maehara into the foreign minister slot to pursue a pro-US policy makes a lot of sense as an anti-Ozawa move.

But by letting Maehara carry the flag for the pro-US policy, Kan has also put Maehara in the hot seat because the paramount issue in US-Japan relations—the relocation of the US Naval Air Station at Futenma in Okinawa—looks like it will be a total fiasco.

Keeping the base on the island—either at Futenma or a new site at Henoko—is opposed by around 70% of Okinawans.

Both candidates for governor have gone on record opposing the continued presence of the base on Okinawa, and they can block new construction at Henoko in a number of ways.

If the base issue remains a continued source of friction in U.S.-Japan relations and a bold re-boot onto 21st century terms for the US-Japan security relationship doesn’t happen, Maehara’s political platform and clout would presumably be compromised.

As for China, Kan probably does not have the intense commitment to a close relationship with US that Maehara exhibits and, as a more peaceable fellow, prefers to keep relations with China on a more even keel.

He already cut Maehara off at the knees by releasing the captain of the misbehaving Chinese fishing vessel back to China when Maehara wanted to try him in Japanese court.

And Kan has apparently made it known that he’s not very pleased that he can’t get meetings with Chinese leaders because they are blowing him off to show how much they disapprove of Maehara.

However, Maehara is a clever fellow and I wonder if Kan—whose approval ratings are currently in the basement—can outmaneuver him.

Maehara also has a potential trump card: the Diaoyutai/Senkaku Islands are administered by Okinawa. If security friction between China and Japan in the East China Sea continues, maybe Okinawan opposition to US military basing could be transformed into support for Japanese and US military facilities on the island as a keystone of Western monitoring and containment of China.

And, in good news for Maehara, continued friction is virtually guaranteed by the heightened attention both sides are eager to give matters in the South China Sea in the aftermath of the fishing boat kerfuffle.

On November 10, an interesting article appeared in the Japanese press concerning plans to expand the military monitoring network in the East China Sea. Here’s an excerpt from the Yomiuri report, and the map:

China threat prompts plan for new GSDF unit
The Defense Ministry plans to establish a new military unit to bolster this nation's ability to monitor the Chinese Navy, which has been increasingly active in waters off Japanese territories, The Yomiuri Shimbun has learned.

A ministry official said the unit will consist of about 200 Ground Self-Defense Force personnel and most likely be based on Yonagunijima, Okinawa Prefecture, this country's westernmost island.

In its budgetary requests for fiscal 2011, the ministry asked for 30 million yen to research the plan, the official said.

The unit's main job will be to monitor via radar the movements of Chinese warships in the East China Sea, including the waters around the Senkaku Islands--which are Japanese territory but are claimed by China--and around the Nansei Islands, which stretch across Kagoshima and Okinawa prefectures.

The unit will exchange information with the U.S. military, thereby strengthening bilateral security cooperation in the waters.

Ah, the Senkakus.

From one perspective, a worthless pile of rocks off Taiwan.

From another perspective, an invaluable flash point illuminating the security conflicts between Japan and China.

I expect the United States will muddle through its economic and geopolitical difficulties somehow.

The US isn’t leaving Asia, China will continue to test the limits of Japanese forbearance in the East China Sea, the political and security conditions for a contain-China policy will remain, and I suspect Seiji Maehara isn’t going anywhere either.

Friday, November 12, 2010

The textbook image of the threat from global warming and rising sea levels is the precarious city/island of Male, capital of the Maldives island nation in the Indian Ocean.

Despite the dazzling images of its tourist resorts, the Maldives is not an unspoiled Eden with underwater cabinet meetings.

As a fascinating photoessay by Francesco Zizola on the Maldives revealed to me, the Malidives is in many ways an artificial human construct. The capital city, Male, is one of the most densely populated cities in the world.

In a quest for lebensraum, the island was expanded by filling in the surrounding sea floor to the encircling coral atoll and beyond. A 3.5 meter high, six kilometer sea wall was constructed with Japanese aid to protect the island (mostly 1 meter above sea level). Another atoll a few miles away, Hulhumale, was filled in to a height of 2 meters above sea level to serve as a new home if Male becomes unviable.

The least edifying piece of geoengineering in the Maldives is Thilafushi Island. Zizola writes:

Thilafushi island, also known as a rubbish island, was originally a vast lagoon. It was reclaimed in 1992 using waste as the filling material to solve Male's unmanageable refuse problem. Few Bengali immigrants work at the waste disposal centre in Thilafushi. Their job basically consists of indicating to the numerous dump trucks where to unload the waste. They then incinerate part of the waste or bury the majority of it in landfill sites. No recycling is carried out and hazardous wastes are not sorted from common rubbish.

Maldives Live reports that 330 tons of rubbish make it to Thilafushi each day, some generated by the thousands of tourists visiting the Maldives, the rest coming from Male.

There are many good reasons for a concerted global effort to mitigate global warming. However, enabling the Maldives to continue its high population density/atoll-filling/trash-dumping/tourism-based lifestyle one meter above sea level is perhaps not one of them.

I have an article up at Asia Times about the Fed's "quantitative easing" a.k.a. QE2 (QE1 was the TARP-era liquidity jolt to the financial system) entitledUS allies take hit from QE2.

Overseas, QE2 is not seen as a Hail Mary attempt to goose the U.S. economy by using a gush of liquidity to induce inflationary expectations.

Instead everybody sees it as a surefire method to devalue the U.S. currency by driving interest rates down and, more importantly, sending a few hundred billion dollars galloping overseas to drive up the value of other peoples' currencies and boost US exports while cutting imports.

It doesn't seem that President Obama was prepared for the global firestorm of criticism this move ignited.

Bear in mind that the currencies of most countries have strengthened over 10% against the dollar in 2010. Brazil, 34%.

That's a lot. And, with QE2, there will probably be more.

Paul Krugman leads the chorus of US econo-wonks defending QE2 as a) an unavoidable domestic measure and b) justified in any case by the inability of the nations of the world to sort out the "global imbalances" mess.

Not so.

The United States, as issuer of the world's de facto reserve currency, has certain responsibilities.

We're pretty much allowed to print as much currency as we want to cover our deficit. In return, pretty much everybody else gets to have a trade surplus with us (not just China and OPEC; the EU, Japan, South Korea, etc.).

You could say that Treasury's real job is matching money creation to global GDP conditions, not just America's.

Our position as the world's demand engine elicited the loyalty of the world's democracies, and the respectful attention of China.

It's the most effective and efficient way of projecting American power, using the energy, creativity, and omnipresence of the marketplace.

Also not terribly expensive if you look at the alternative: trying to project power militarily in money pits like Afghanistan and Iraq.

Per B.B. King, call it Paying the Cost to be the Boss.

The flip side is we're not supposed to dump liquidity in the global market and put appreciative pressure on everybody's currency just because Congress can't pass a stimulus package.

And, most importantly, we don't do it unilaterally.

Clearly, the United States wants to get out of the "engine of the world economy" business.

It could be reasonably argued--and I think President Obama is obliquely making the case-- that our trade partners should suck it up and let our exporters make a few billion dollars of hay overseas as partial repayment for the fifty years we've put in as the world's last-resort purchaser of underwear, cars, and crappy toys.

But the Obama administration has spent the last year methodically kicking the ass of the country positioned to turn into the world's best customer--China--in every available diplomatic forum. So Beijing is not in the mood to do Washington any favors.

And, instead of continuing to isolate and attack China for its undervalued RMB, the United States undertook a de facto devaluation that has gored everybody's ox--our allies as well as China.

And, beyond devaluing our currency, the United States has conceded that it is out of the stimulus business. We're not going to grow the pie. We're going to fight with everybody--the EU, Japan, etc. as well as China--to get a bigger slice.

Trade War!

Now a lot of countries--Japan, Thailand, Philippines, South Korea, Brazil to name a few--are trying to limit the rise in the value of their currencies against the dollar and maintain their export competitiveness.

At the G20 summit in Seoul, the other nations tried to deal with the consequence of the US devaluation and put the brakes on the currency war by issuing a statement deploring "competitive devaluations".

I've done a quick scan of the US media and I haven't found anybody yet that recognizes that the "competitive devaluation" statement was a direct repudiation of the train of events set in motion by the US monetary easing.

Also, nobody seems to have picked up on the quixotic nature of the rejected US proposal: a condemnation of "undervaluation".

Everybody's trying to undervalue now. It's not just China. Nobody wants to sacrfice their exports in a noble quest to find out how low the dollar can go.

I sympathize with President Obama and his difficulties.

The Republican agenda seems designed to achieve a failed presidency and forestall President Obama's re-election: no economic recovery, legislative gridlock, no peace in the Middle East, and plenty of grinding, unproductive conflict with Iran and China.

But it looks like QE2 was a self-inflicted wound, born of domestic political and economic calculations that gave inadequate weight to its global impact.

I hope President Obama doesn't go into history as America's Gorbachev, the guy who took the politically devastating step of admitting that the imperial equation no longer computed.

Saturday, November 06, 2010

It addresses China's well-publicized international PR problems relating to its effective exploitation of the "Clean Development Mechanism", a Kyoto Treaty process for funneling global warming mitigation investment to developing countries.

A context for the flurry of criticism, some justified apparently justified and some apparently not, for China's alleged CDM-related transgressions, is enviro frustration with China and frustration with China's actions on climate change.

But I think the real Western frustration is with Kyoto, and CDM as one of its fruits.

There is a certain enthusiasm in the U.S. for killing the Kyoto treaty. If that happens, expect CDM abuses--and China--to be part of the story.

Because the alternate story is pretty grim, and doesn't show the U.S. in an especially flattering light.

Early this year, I wrote that the debacle at Copenhagen was attributable in fact to the U.S. need to find a scapegoat for lack of progress in creating a legally binding successor to Kyoto.

A U.S. commitment to mandatory national carbon caps was indispensable in order to strongarm China, India, and Brazil (plus South Africa these countries formed the so-called "BASIC" bloc) into taking the extremely unpalatable step of accepting carbon caps (and limits on economic growth) themselves.

The U.S. had opted out of Kyoto under Bush II. President Obama, a genuine enthusiast for climate policy, had unfortunately scheduled the carbon bill to come up after he finished with health care. Health care turned into a protracted, politically draining ordeal and President Obama headed off to Copenhagen without the keystone U.S. commitment.

Recognizing that the achievement of a true successor regime at Copenhagen was impossible, the U.S., in my view, decided to dodge the political fallout by painting China into the obstructionist corner instead.

So, at Copenhagen, the U.S. made a great piece of political theater out of threatening to withhold billions of dollars in global warming funding for poorer countries unless China submitted to its demands for "transparency" in the process of documenting greenhouse gas mitigation activities.

Copenhagen was a train wreck, and the U.S. was happy to see China take the rap, underservedly so, in my opinion.

Back in the Obama-walks-on-water period, this was not a particularly popular view.

The consensus in the West was to blame China for what Australian PM Kevin Rudd characterized as administering a Copenhagen "ratfucking".

Fast forward a year--and a notable lack of serious action by the U.S. on climate change while China is chugging along with some serious clean energy initiatives--and views on the climate change dynamic are somewhat more nuanced, at least for anybody paying attention. In contrast to the global circus at Copenhagen, this year's conference in Cancun will pass virtually unnoticed by the public at large..

In my Asia Times piece I draw on an on-site report by Angela Hsu of the Yale Center for Environmental Law and Policy. Hsu attended a Tianjin preparatory meeting for Cancun.

She writes:

Su’s comments in the corridors of the Tianjin Meijiang Convention Center reflect his obvious frustration with what he feels is hypocrisy on the part of the U.S. in the climate negotiations. During a press conference, Su criticized the United States for failing to meet its UNFCCC commitments, particularly in terms of pledges to reduce greenhouse gas emissions and to provide financial assistance to developing countries. He said it was unfair for the United States to criticize China and make them the scapegoat in the climate debates when the United States itself “isn’t doing anything,” Su said. His remarks were counter to a speech Todd Stern, Special Envoy for Climate Change in the United States, gave at the University of Michigan Law School in which he said that China was “spurning” commitments made in Copenhagen, acting as if the agreement “never happened.”

...

Despite these efforts, the US still pushed China on the MRV [monitoring, review, and verification] issue in Tianjin, which I think could have been a negotiating tactic on the part of the US to deflect attention away from the fact that the Washington still has been unable to pass national legislation on energy and climate change.

In his report on Todd Stern's rip on the Chinese, Bloomberg's Jim Efstathiou reached out to Alden Meyer of the Union of Concerned Scientists for a comment.

“I don’t know what the grounds are” for the Obama administration to say China is “not being serious about its commitment,” Meyer said in an interview. “They agreed to carry out that pledge. They’re not willing to make that legally binding.”

...

Nations also agreed to negotiate independent monitoring to verify their commitments. China has historically balked at such measures, Meyer said.

“The agreement on paper makes no sense unless you have actual guidelines,” for verification, Meyer said.

...

“China is not very impressed by what the U.S. is doing,” Meyer said. China has been “more clear on the steps they will take to meet their target by 2020 than the U.S. is on Obama’s pledge to meet the 17 percent cut without legislation.”

In contrast to its grand plans for Copenhagen, the United States has subsequently adopted a remarkably dismissive tone concerning Kyoto.

At the Major Economies Forum--a climate gabfest that the US and EU envisage as a successor to the current process, stripped of those irritating and self-righteous third world countries and giving the U.S. its deserved podium space--Todd Stern weaseled determinedly on the issue of Kyoto's future:

QUESTION: Svenning Dalgaard from TV2, Denmark. In Copenhagen we saw particularly the G77 insisting that the Kyoto protocols would carry on and that all negotiations should be led on that basis. Don't you meet the same demands here in your own forum?

MR. STERN: The Kyoto protocol question is a very difficult one, I agree with you. And there was some discussion of the Kyoto protocol here in the MEF meeting. The parties have very different views, very different views on that.

The U.S. is uncharacteristically not, as compared to all the other issues, we aren't really a player on that issue because we're not part of the Kyoto protocol. So we are a very actively interested observer rather than real participant on the Kyoto issue. But it is very difficult and you still do have a lot of parties in the G77 who are keen on having a second commitment period. And you have a number of the industrialized parties who are resistant to that.

And by the way, it's not so hard to understand the concerns about it. The Kyoto -- the representative from Australia actually passed around a little chart that showed that Kyoto covers 28 percent global emissions. The Copenhagen Accord, at the moment, if you look at the parties who have made submissions, covers over 80 of global emissions.

It is also true that Kyoto -- I refer to what I've described as the Kyoto paradigm a little earlier, where all the action comes from developed countries and not from developing. And I think that there are as many people, and this certainly includes the United States as a general matter, who believe that you can't possibly solve this problem on the back of 40 or 45 percent of global emissions, that you have to solve the problem on the back of 85 or 90 percent of global emissions.

So it is a -- again, we aren't a direct participant in that debate, but it is an ongoing and difficult debate and very much unresolved.

"Weaseling" is not a fair word, I guess. The G77 were right at Copenhagen. The United States and EU want to kill Kyoto. That--not Chinese resistance to intrusive inspections--is the story.

If Kyoto--which is set to expire in 2012--dies, the cap exemption for China, India, and Brazil dies with it. The embarrassment of America's retreat from Kyoto is forgotten. Time for a new deal!

Trouble is--back to square one--no global greenhouse cap system is going to instituted without binding U.S. participation.

U.S. national cap and trade legislation was a forlorn hope even before the mid-terms; after the midterms, even President Obama abandoned his plans.

At the end of the Asia Times article I did the math on global warming.

To have a 75% chance of averting the 2% rise in global average temps that is supposed to be a catastrophe, the world should pump no more than 750 billion tons of greenhouse gases in the atmosphere by 2050.

The current emission rate is about 30 billion tons per year.

To meet the budget, everybody would have to cut back at least 30%. Right now.

Not gonna happen.

EU may do it's share, as part of its rather noble effort to try to solve the world's problems by itself. China's stated policy is to cut intensity as a ratio of energy to GDP, but the absolute number is going up. India and Brazil are expected to keep increasing emissions also. United States--well, I guess we can ask President Boehner what he thinks.

Back of the envelope-wise, we'll probably miss the target by several hundred billion tons.

It's the end of the world, baby.

On a lighter note, the title of the AT article comes from a widely reported diss administered by China's chief climate negotiator at Tianjin, Su Wei, to the United States.

Thanks to Angela Hsu, we know the Chinese phrase:

豬八戒照鏡子，裡外不是人

Zhu Bajie looks in the mirror; he doesn't see anything human inside or outside it.

Zhu Bajie is an important character in the famous Chinese novel, Journey to the West a.ka. (in Arthur Waley's translation) Monkey.

Taking the historical journey of the Chinese monk Tripitika (in Sanscrit; Xuan Zang in Mandarin) to India to pick up Buddhist scriptures as a point of departure, Journey to the West is a mythological spectacular, a ten-thousand mile battle against gods and demons, starring the Monkey King as Tripitika's raffish supernatural protector.

Zhu Bajie (usually referred to as "Pigsy" in English) is another member of the Tripitika posse.

He's half-man, half-pig, the result of a botched heavenly punishment. His name means "Pig of the Eight [Buddhist] Precepts".

Zhu Bajie spends much of the book violating these Buddhist commandments and providing comic relief.

He also represents the overpowering, earthy nature of man (his characteristic weapon is a lethal manure rake) that Buddhist practice is supposed to overcome through eons of reincarnation, meditation, and proper practice, and is a character whose struggle with his flaws readers can sympathize and identify with.

You can see Pigsy on the Sohu Internet channel in the faithful, 57 episode (20+ hours) adaptation that recently aired on Chinese TV.

Remarkably, the Pigsy character was also the hero of two popular, for lack of a better term, TV supernatural rom-com soap operas, 春光灿烂猪八戒 Glittering Spring Light on Pigsy and 福星高照猪八戒 Lucky Star Shines on Pigsy. In addition to appearing in the traditional swineface, Pigsy is incarnated on earth as a rather amiable and attractive young man searching for his true love. Production values, acting, and special effects are best described as "enthusiastic". You might not be up for the combined 78 episodes, but the opening credits here are well worth the click.

The anecdote about Zhu Bajie and the mirror doesn't occur in Journey to the West. Maybe it came out of some later play, story, or opera.

Remarkably, nobody seems to know (and I did some serious reaching out to try to find out, believe me) where the mirror story arose and what it originally meant.

The most common account I came across was that Zhu Bajie came across a mirror. He was repelled by the hideous reflection and broke the mirror; then he was confronted by multiple reflections of the same offending image in the mirror shards.

D'oh!

Today, apparently the phrase "Zhu Bajie looks at the mirror" is a commonly-used xiehouyu--(歇後語)--a two-part allegorical saying, in which the second, explanatory part (in this case, "doesn't see anything human inside or out") is usually not spoken.

It has a variety of implied meanings.

The most commonly accepted one appears to be "tried to do something about a problem but ended up just making it worse".

I would expect that Su wanted to make the statement that the United States was trying to obscure its allegedly ugly record on climate change by attacking its detractors; instead, through its actions, it simply multiplied unfavorable perceptions of its behavior held by others.

That's rather subtle and almost impossible to convey in English. So we have to settle for "pig preening itself in front of a mirror".